RESTRICTED STOCK AWARD AGREEMENT CRAFTMADE INTERNATIONAL, INC. 2006 LONG-TERM INCENTIVE PLAN
Exhibit 10.5
CRAFTMADE INTERNATIONAL, INC.
2006 LONG-TERM INCENTIVE PLAN
2006 LONG-TERM INCENTIVE PLAN
Pursuant to the 2006 Long-Term Incentive Plan (the “Plan”) of Craftmade International, Inc., a
Delaware corporation (the “Company”),
has been granted a Restricted Stock Award in accordance with Section 6.4 of the Plan.
1. Terms of Award. The number of shares of Common Stock awarded under this Award
Agreement (this “Agreement”) is shares (the “Awarded Shares”). The Date of Grant of
this Award is , 20___. [Delete if no purchase price: The purchase price per share
for the Awarded Shares is $ per share (which is equal to or greater than the Fair Market
Value of a share of Common Stock as of the Date of Grant).]
2. Subject to Plan. This Agreement is subject to the terms and conditions of the
Plan, and the terms of the Plan shall control to the extent not otherwise inconsistent with the
provisions of this Agreement. To the extent the terms of the Plan are inconsistent with the
provisions of this Agreement, this Agreement shall control. The capitalized terms used herein that
are defined in the Plan shall have the same meanings assigned to them in the Plan. This Agreement
is subject to any rules promulgated pursuant to the Plan by the Board or the Committee and
communicated to the Participant in writing.
3. Vesting. Except as specifically provided in this Agreement and subject to certain
restrictions and conditions set forth in the Plan, the Awarded Shares shall be vested as follows:
a. percent (___%) of the total Awarded Shares shall vest on the first
anniversary of the Date of Grant, provided the Participant is employed by (or, if the
Participant is a Consultant or an Outside Director, is providing services to) the Company or
a Subsidiary on that date.
b. An additional percent (___%) of the total Awarded Shares shall vest on
the second anniversary of the Date of Grant, provided the Participant is employed by (or, if
the Participant is a Consultant or an Outside Director, is providing services to) the
Company or a Subsidiary on that date.
c. An additional percent (___%) of the total Awarded Shares shall vest on
the third anniversary of the Date of Grant, provided the Participant is employed by (or, if
the Participant is a Consultant or an Outside Director, is providing services to) the
Company or a Subsidiary on that date.
d. The remaining percent (___%) of the total Awarded Shares shall vest on
the fourth anniversary of the Date of Grant, provided the Participant is employed by (or, if
the Participant is a Consultant or an Outside Director, is providing services to) the
Company or a Subsidiary on that date.
Notwithstanding the foregoing, the vesting of all Awarded Shares shall automatically accelerate in
full upon the occurrence of a Change in Control.
4. Forfeiture of Awarded Shares. Awarded Shares that are not vested in accordance with
Section 3 shall be forfeited on the date of the Participant’s Termination of Service. Upon
forfeiture, all of the Participant’s rights with respect to the forfeited Awarded Shares shall
cease and terminate, without any further obligations on the part of the Company. [Delete if no
purchase price: The Company {shall be obligated to/may, in its sole discretion, elect to} pay the
Participant, as soon as practicable after the event causing forfeiture, in cash, an amount equal to
the lesser of the total consideration paid by the Participant for such forfeited shares or the Fair
Market Value of such forfeited shares as of the date of Termination of Service, as the Committee,
in its sole discretion shall select.]
5. Restrictions on Awarded Shares. Awarded Shares that are not vested in accordance
with Section 3 and which are subject to forfeiture in accordance with Section 4
shall be subject to the terms, conditions, provisions, and limitations of this Section 5.
(a) Subject to the provisions of the Plan and the other terms of this Agreement, from
the Date of Grant until the date the Awarded Shares are vested in accordance with
Section 3 and no longer subject to forfeiture in accordance with Section 4
(the “Restriction Period”), the Participant shall not be permitted to sell, transfer, pledge
or assign shares any of the Awarded Shares.
(b) Except as provided in paragraph (a) above, the Participant shall have, with respect
to his or her Awarded Shares, all of the rights of a stockholder of the Company, including
the right to vote the shares, and the right to receive any dividends thereon.
6. Legend. The following legend shall be placed on all certificates representing
Awarded Shares:
On the face of the certificate:
“Transfer of this stock is restricted in accordance with
conditions printed on the reverse of this certificate.”
On the reverse:
“The shares of stock evidenced by this certificate are
subject to and transferable only in accordance with that
certain Craftmade International, Inc. 2006 Long-Term
Incentive Plan, a copy of which is on file at the principal
office of the Company in Coppell, Texas. No transfer or
pledge of the shares evidenced hereby may be made except in
accordance with and subject to the provisions of said Plan.
By acceptance of this certificate, any holder, transferee or
pledgee hereof agrees to be bound by all of the provisions
of said Plan.”
The following legend shall be inserted on a certificate evidencing Common Stock issued under
the Plan if the shares were not issued in a transaction registered under the applicable federal and
state securities laws:
“Shares of stock represented by this certificate have been
acquired by the holder for investment and not for resale,
transfer or distribution, have been issued pursuant to
exemptions from the
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registration requirements of applicable state and federal
securities laws, and may not be offered for sale, sold or
transferred other than pursuant to effective registration
under such laws, or in transactions otherwise in compliance
with such laws, and upon evidence satisfactory to the
Company of compliance with such laws, as to which the
Company may rely upon an opinion of counsel satisfactory to
the Company.”
All Awarded Shares owned by the Participant shall be subject to the terms of this Agreement
and shall be represented by a certificate or certificates bearing the foregoing legend.
7. Delivery of Certificates. Certificates for Awarded Shares free of restriction
under this Agreement shall be delivered to the Participant promptly after, and only after, the
Restriction Period has expired without forfeiture pursuant to Section 4. In connection
with the issuance of a certificate for Restricted Stock, the Participant shall endorse such
certificate in blank or execute a stock power in a form satisfactory to the Company in blank and
deliver such certificate and executed stock power to the Company.
8. Voting. The Participant, as record holder of the Awarded Shares, has the exclusive
right to vote, or consent with respect to, such Awarded Shares until such time as the Awarded
Shares are transferred in accordance with this Agreement or a proxy is granted pursuant to
Section 9 below; provided, however, that this Section 9 shall not
create any voting right where the holders of such Awarded Shares otherwise have no such right.
9. Proxies. The Participant may not grant a proxy to any person, other than a
revocable proxy not to exceed 30 days in duration granted to another stockholder for the sole
purpose of voting for directors of the Company.
10. Representations, Etc. Each spouse individually is bound by, and such spouse’s
interest, if any, in any Awarded Shares is subject to, the terms of this Agreement. Nothing in
this Agreement shall create a community property interest where none otherwise exists.
11. Simultaneous Death. If Participant and his or her spouse both suffer a common
accident or casualty which results in their respective deaths within 60 days of each other, it
shall be conclusively presumed, for the purpose of this Agreement, that the Participant died first
and the spouse died thereafter.
12. Specific Performance. The parties acknowledge that remedies at law will be
inadequate remedies for breach of this Agreement and consequently agree that this Agreement shall
be enforceable by specific performance. The remedy of specific performance shall be cumulative of
all of the rights and remedies at law or in equity of the parties under this Agreement.
13. Participant’s Representations. Notwithstanding any of the provisions hereof, the
Participant hereby agrees that he or she will not acquire any Awarded Shares, and that the Company
will not be obligated to issue any Awarded Shares to the Participant hereunder, if the issuance of
such shares shall constitute a violation by the Participant or the Company of any provision of any
law or regulation of any governmental authority. Any determination in this connection by the
Company shall be final, binding, and conclusive. The obligations of the Company and the rights of
the Participant are subject to all applicable laws, rules, and regulations.
14. Investment Representation. Unless the Common Stock is issued to him or her in a
transaction registered under applicable federal and state securities laws, by his or her execution
hereof, the Participant
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represents and warrants to the Company that all Common Stock which [is granted/may be
purchased] hereunder will be acquired by the Participant for investment purposes for his or her own
account and not with any intent for resale or distribution in violation of federal or state
securities laws. Unless the Common Stock is issued to him or her in a transaction registered under
the applicable federal and state securities laws, all certificates issued with respect to the
Common Stock shall bear an appropriate restrictive investment legend and shall be held
indefinitely, unless they are subsequently registered under the applicable federal and state
securities laws or the Participant obtains an opinion of counsel, in form and substance
satisfactory to the Company and its counsel, that such registration is not required.
15. Participant’s Acknowledgments. The Participant acknowledges that a copy of the
Plan has been made available for his or her review by the Company, and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Award subject to all the
terms and provisions thereof. The Participant hereby agrees to accept as binding, conclusive, and
final all decisions or interpretations of the Committee or the Board, as appropriate, upon any
questions arising under the Plan or this Agreement.
16. Law Governing. This Agreement shall be governed by, construed, and enforced in
accordance with the laws of the State of Delaware (excluding any conflict of laws rule or principle
of Delaware law that might refer the governance, construction, or interpretation of this agreement
to the laws of another state).
17. No Right to Continue Service or Employment. Nothing herein shall be construed to
confer upon the Participant the right to continue in the employ or to provide services to the
Company or any Subsidiary, whether as an Employee or as a Consultant or as an Outside Director, or
interfere with or restrict in any way the right of the Company or any Subsidiary to discharge the
Participant as an Employee, Consultant or Outside Director at any time.
18. Legal Construction. In the event that any one or more of the terms, provisions,
or agreements that are contained in this Agreement shall be held by a court of competent
jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid,
illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision,
or agreement that is contained in this Agreement and this Agreement shall be construed in all
respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been
contained herein.
19. Covenants and Agreements as Independent Agreements. Each of the covenants and
agreements that are set forth in this Agreement shall be construed as a covenant and agreement
independent of any other provision of this Agreement. The existence of any claim or cause of
action of the Participant against the Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company of the covenants and agreements
that are set forth in this Agreement.
20. Entire Agreement. This Agreement together with the Plan supersede any and all
other prior understandings and agreements, either oral or in writing, between the parties with
respect to the subject matter hereof and constitute the sole and only agreements between the
parties with respect to the said subject matter. All prior negotiations and agreements between the
parties with respect to the subject matter hereof are merged into this Agreement. Each party to
this Agreement acknowledges that no representations, inducements, promises, or agreements, orally
or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not
embodied in this Agreement or the Plan and that any agreement, statement or promise that is not
contained in this Agreement or the Plan shall not be valid or binding or of any force or effect.
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21. Parties Bound. The terms, provisions, and agreements that are contained in this
Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their
respective heirs, executors, administrators, legal representatives, and permitted successors and
assigns, subject to the limitation on assignment expressly set forth herein. No person or entity
shall be permitted to acquire any Awarded Shares without first executing and delivering an
agreement in the form satisfactory to the Company making such person or entity subject to the
restrictions on transfer contained in Section 5 hereof.
22. Modification. No change or modification of this Agreement shall be valid or
binding upon the parties unless the change or modification is in writing and signed by the parties;
provided, however, that the Company may change or modify this Agreement without the Participant’s
consent or signature if the Company determines, in its sole discretion, that such change or
modification is necessary for purposes of compliance with or exemption from the requirements of
Section 409A of the Code or any regulations or other guidance issued thereunder. Notwithstanding
the preceding sentence, the Company may amend the Plan to the extent permitted by the Plan.
23. Headings. The headings that are used in this Agreement are used for reference and
convenience purposes only and do not constitute substantive matters to be considered in construing
the terms and provisions of this Agreement.
24. Gender and Number. Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words in the singular number shall be held to include
the plural, and vice versa, unless the context requires otherwise.
25. Notice. Any notice required or permitted to be delivered hereunder shall be
deemed to be delivered only when actually received by the Company or by the Participant, as the
case may be, at the addresses set forth below, or at such other addresses as they have theretofore
specified by written notice delivered in accordance herewith:
(a) Notice to the Company shall be addressed and delivered as
follows:
Craftmade International, Inc.
Attn:
Facsimile:
Facsimile:
(b) Notice to the Participant shall be addressed and delivered as set forth on the
signature page.
26. Tax Requirements. The Participant is hereby advised to consult immediately with
his or her own tax advisor regarding the tax consequences of this Agreement, the method and timing
for filing an election to include this Agreement in income under Section 83(b) of the Code, and the
tax consequences of such election. By execution of this Agreement, the Participant agrees that if
the Participant makes such an election, the Participant shall provide the Company with written
notice of such election in accordance with the regulations promulgated under Section 83(b) of the
Code. The Company or, if applicable, any Subsidiary (for purposes of this Section 26, the
term “Company” shall be deemed to include any applicable Subsidiary), shall have the right to
deduct from all amounts paid in cash or other form in connection with the Plan, any Federal, state,
local, or other taxes required by law to be withheld in connection with this Award. The Company
may, in its sole discretion, also require the Participant receiving shares of Common Stock issued
under the Plan to pay the Company the amount of any taxes that the Company is required to withhold
in connection with the
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Participant’s income arising with respect to this Award. Such payments shall be required to
be made when requested by Company and may be required to be made prior to the delivery of any
certificate representing shares of Common Stock. Such payment may be made (i) by the delivery of
cash to the Company in an amount that equals or exceeds (to avoid the issuance of fractional shares
under (iii) below) the required tax withholding obligations of the Company; (ii) if the Company, in
its sole discretion, so consents in writing, the actual delivery by the Participant to the Company
of shares of Common Stock that the Participant has not acquired from the Company within six (6)
months prior thereto, which shares so delivered have an aggregate Fair Market Value that equals or
exceeds (to avoid the issuance of fractional shares under (iii) below) the required tax withholding
payment; (iii) if the Company, in its sole discretion, so consents in writing, the Company’s
withholding of a number of shares to be delivered upon the vesting of this Award, which shares so
withheld have an aggregate Fair Market Value that equals (but does not exceed) the required tax
withholding payment; or (iv) any combination of (i), (ii), or (iii). The Company may, in its sole
discretion, withhold any such taxes from any other cash remuneration otherwise paid by the Company
to the Participant.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer, and the Participant, to evidence his or her consent and approval of all the
terms hereof, has duly executed this Agreement, as of the date specified in Section 1
hereof.
| COMPANY: | ||||||
| CRAFTMADE INTERNATIONAL, INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| PARTICIPANT: | ||||||
| Signature | ||||||
| Name: | ||||||
| Address: | ||||||
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